It would have been wrong somehow if the Trump administration hadn’t seen a Bitcoin resurgence

Fortunately,  the Financial Times has been doing its usual first-rate job poking at the bubble. Here Jemima Kelly explains how meaningless the standard Bitcoin narrative is. The whole piece is highly recommended as is the HODL link and Trolly's blog.

The first problem is that bitcoin is not of course a company — nor even, we would argue, an asset — so working out its “market cap” is a non-starter. As some of you might remember, it was originally designed to be a currency that could be used to buy actual things! And although it fails to meet all the criteria that would make it a currency, it does have one thing in common with it: its price is underpinned by sheer faith. The difference being that with fiat currencies, that faith is effectively placed in the governments of the nation states who issue them, whereas for bitcoin, the faith is placed in . . . the hope that other people will keep having the faith. A faith in faith, if you will.

Another problem is that although 18.6m bitcoins have indeed been mined, far fewer can actually be said to be “in circulation” in any meaningful way.

For a start, it is estimated that about 20 per cent of bitcoins have been lost in various ways, never to be recovered. Then there are the so-called “whales” that hold most of the bitcoin, whose dominance of the market has risen in recent months. The top 2.8 per cent of bitcoin addresses now (Read more...)